Diversifying bond portfolio

[torres9]

I am concerned about my bond portfolio. With the anticipated rise in interest rates what is best move to make?

My port is 63 stock, 25 bond, 12 cash. 90 percent of the bonds are in MWTRX, 10 percent in vanguard tips fund. Mwtrx has done well and has reasonable costs. I am not interested in junk bonds or foreign bonds. All bond funds are held in retirement accounts. I typically dca my401k/ deferred comp monies into these 2 funds. Hoping to er in 6.5 yes!

Would you look for shorter duration bonds as an alternative? Am thinking to run this by a Vanguard cfp but would appreciate all of ur thoughts.


Happy 2011 to all!

Torres9

 

[audreyh1]

Your bond exposure is small. MWTRX is a great fund. It is likely to recover within a couple of years if there really is a bond rout. IMO shorter term bonds may not be the solution. I think you should just hold tight and keep DCAing.

Oh - and if there is a rout (and who knows when that will be) take advantage of it by rebalancing to buy more MWTRX if it really is hammered. Then when it eventually recovers, you will be ahead of the game.

Audrey